The parent company of Boston Store, Younkers and other stores said its voluntary Chapter 11 bankruptcy petition, filed in U.S. Bankruptcy Court in Delaware, would allow it to explore strategic alternatives, such as a sale of the company or parts of it in a plan of reorganization.

The Younkers at Forest Mall in Fond Du Lac is among the nine Wisconsin stores that Bon-Ton Stores ...more

The Younkers at Forest Mall in Fond Du Lac is among the nine Wisconsin stores that Bon-Ton Stores is closing.

Paul Gores / Milwaukee Journal Sentinel

Its stores and online operations remain open for business as usual, the company said.

In its announcement Sunday, Bon-Ton said the company is in "constructive discussions" with potential investors and its debt holders regarding the terms of a financial restructuring plan.

Bon-Ton said it has received a commitment from a group of lenders for up to $725 million in special financing, known as debtor-in-possession financing, which, subject to court approval, is expected to support the company's operations during the financial restructuring process.

"We are currently engaged in discussions with potential investors and our debt holders on a financial restructuring plan, and the actions we are taking are intended to give us additional time and financial flexibility to evaluate options for our business," Bill Tracy, president and chief executive officer of Bon-Ton, said in a statement. "Bon-Ton has seven well-loved brands and associates who have remained committed to delivering excellent service to our customers for decades. During this court-supervised process, we plan to continue operating in the normal course and executing on our key initiatives to drive improved performance."

In addition to Boston Store and Younkers, Bon-Ton operates under the brand names Bergner's, Bon-Ton, Carson's, Elder-Beerman and Herberger's.

Bon-Ton has not been profitable since 2010, and is headed for a loss for fiscal 2017 as well. Online merchants such as Amazon and others have cut into business, and fewer consumers are going to shopping malls.

Stores operated by Bon-Ton are anchor tenants in many shopping centers, including about two dozen in Wisconsin. In metro Milwaukee, Bon-Ton has Boston Store locations at Mayfair in Wauwatosa, Brookfield Square, Southridge in Greendale and Grand Avenue in Milwaukee.

Bon-Ton has about 600 employees in Milwaukee, which is one of the two cities it calls headquarters. The other is York, Pa.

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The bankruptcy filing isn’t a surprise. Bon-Ton popped up on lists of companies most likely to default throughout 2017, and it has been closing stores.

Bon-Ton has about $1.1 billion in debt. Credit agencies have downgraded Bon-Ton’s credit rating as sales have dropped.

Last week, Bon-Ton announced it planned to close 42 more of its 256 stores in 2018, including nine in Wisconsin, and perhaps keep another 20 on a watch list for further deterioration. The company said Sunday that four previously announced closings took place in January and another is about to shut down, which would give it 47 store closings in 2018.

Earlier in January, Tracy — the company’s fourth CEO since 2012 — said the company was “actively engaged in discussions with our debt holders in an effort to strengthen our capital structure to support the business going forward.”

Now those talks with debtors will occur under the supervision of a judge in bankruptcy court. In Chapter 11 bankruptcy, a company is allowed to replace its current debt structure with a renegotiated debt structure. If creditors and a judge sign off on the plan, the new debt structure is put in place.

The company’s stock price, which stood at about $30 per share in 2006 when Bon-Ton bought Boston Store and others from Saks Inc., closed at an all-time low Friday of 15 cents per share.

WIth consultant AlixPartners, Bon-Ton recently put together a plan to try turn around the company's fortunes. The plan focuses on closing underperforming stores, providing more sought-after merchandise, improving its marketing and increasing online-related sales by 50% in the next two years.

Bon-Ton entered Wisconsin for the first time in 2003 when it purchased the Elder-Beerman department store chain, which had five stores in the state, for almost $93 million.

But its big expansion in Wisconsin came in 2006, when Bon-Ton bought the Saks Inc. Northern Group, which was headquartered in Milwaukee, for about $1.05 billion. The Saks Inc. Northern Group included the Boston Store, Carson Pirie Scott, Bergner’s, Herberger’s and Younkers department stores.

The deal created what at the time was the second-largest department store chain in the U.S., with about 280 locations. Only Dillard’s, with 329, was bigger.

The merchandising and marketing units remained in Milwaukee — where Boston Store was started in 1897 — giving the city dual headquarters status with Bon-Ton’s York, Pa., home base.